What Does Prime Minister's Return Mean For North Korea's Economy?In recent weeks, we've heard a lot of threats from North Korea. Yet we know little about their leadership when it comes to domestic policy. For a window into what changes might be like, David Greene talks to North Korean expert Marcus Noland, director of Studies at the Peterson Institute for International Economics.

In recent weeks, we've heard a lot of threats from North Korea. Yet we know little about their leadership when it comes to domestic policy. For a window into what changes might be like, David Greene talks to North Korean expert Marcus Noland, director of Studies at the Peterson Institute for International Economics.

DAVID GREENE, HOST:

Now, even with all this saber-rattling from North Korea, the hard-line government there appointed a new prime minister this week. Pak Pong-ju returns to the post he was fired from in 2007. He is seen as an economic reformer, though in a country where workers have few rights and where farmers have long had to hand over whatever they produce to the state, reforms have their own definition.

To learn more, we reached Marcus Noland, director of studies at the Peterson Institute for International Economics. We asked him what the prime minister's return could mean for North Korea's economy.

MARCUS NOLAND: So his rehabilitation is being seen as a modestly positive sign that the North Koreans may be interested in economic reform, though when they talk about reform it's not really reform as you or I might think of it.

GREENE: Not exactly what we'd be used to.

NOLAND: Well, on the agricultural sector, for example, the agriculture is organized by the state and these big state farms. And what they're talking about is pushing the responsibility down to teams that are about eight or 10 members and giving them greater autonomy. Farmers will be able to retain a certain percentage of what they produce.

What can they do with that share they retain? Well, they can eat it themselves or they can sell it. But where can they sell it? Selling grain in the market is illegal. Well, it appears that what they're going to be able to do is sell it back to the state. But at what price? At a price set by the state.

GREENE: That really is a window into how these so-called reforms are not ones we would be familiar with.

NOLAND: Yeah. For example, one of the things the Chinese have done over the last year is greatly expand a program of temporary visas by which the North Koreans ship workers to China and they work generally in things like mining, construction, logging, and most of that money goes directly to the North Korean state. So it's not like you or I deciding that, you know, life would be better in China and we'll go over there and check it out.

It's more like we're part of an organized state to state export of labor.

GREENE: I'm doing the work, but the money that I'm essentially making is going right to my government.

NOLAND: Exactly.

GREENE: Are they expanding that program or what are the plans?

NOLAND: Yeah. The Chinese are issuing as many as 100,000 visas this year for a temporary worker program. They do it with other countries as well. And they're very tightly controlled. They live in dormitories which are guarded. There are party people assigned to those worker details. Some of these individuals actually work side jobs in the evenings.

For example, in Russia where they also export labor, these guys will work as busboys or dishwashers in restaurants and they are subject to strip searches when they come back to the dormitories at night to see if they're carrying any money. And there are Russian employers who've developed reputations for great honesty who will actually remit the money back to North Korea to these guys' families for them.

GREENE: Do any of the reforms or so-called reforms we're talking about have any chance of helping regular North Koreans in the country or is it just a matter of helping the government?

NOLAND: There's modest improvements, but the fact of the matter is the North Korean economy is operating in such a way that the lion's shares of the benefits go to a very small elite and much of the population remains chronically food insecure. Recent UNICEF survey concluded that 10 percent of the two-year-olds in the country are severely stunted, and stunting at that age confers lifelong physical and mental challenges.

So it's an economy that's run to the benefit of a very small group of people who ultimately prioritize control over prosperity.

GREENE: And with Kim Jong Un now in power, any sense that there could be fundamental shifts in the economic system and the political system in this country anytime soon?

NOLAND: Well, there's a contradiction at the heart of this. It's hard to hang out the shingle that says open for business if you're waving nuclear weapons at people and threatening first strikes. And until whatever economic changes or reforms that the North Koreans would like to do are brought into synch with a foreign policy that's less bellicose and it doesn't involve ever-tightening sanctions imposed by the United Nations and the United States and others, it's very hard to see how this would work, other than simply deepening involvement with China.

GREENE: Marcus Noland, thanks so much for joining us. It's been a pleasure.

NOLAND: It's been a pleasure. Thank you.

GREENE: He's director of studies at the Peterson Institute for International Economics.

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